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Rice struggling in current setting

Higher crop prices for rice are not projected as in other crops.

Forrest Laws

April 8, 2022

The reference price for the Price Loss Coverage or PLC program in the 2014 and 2018 farm bills are outdated and need to be revisited when the House and Senate Agriculture Committees begin writing the next farm law.

While that may apply to each of the commodities covered by PLC, it’s especially true for rice producers who haven’t experienced the “beans in the high teens” or dollar-plus cotton that growers of those commodities have been watching.

“As most of the committee knows, we work with all types of producers, and among all the different types of systems we work with rice is the one that’s actually not doing very well,” said Dr. Joe Outlaw, co-director of Texas A&M University’s Agricultural and Food Policy Center in College Station.

“They’re not projected to do very well over the next few years, mainly because they don’t benefit from the higher prices to offset all these high costs that you mentioned,” Outlaw said, referring to a question from Rep. Rick Crawford, R-Ark., during a hearing held by the House Agriculture Committee. (The projected effective 2021 reference price for long grain rice is 14 cents per pound.)

Safety net for rice

Outlaw said the current safety net, which includes the PLC and Agriculture Risk Coverage or ARC programs, were put in place in the 2014 farm bill using costs from 2012 when fertilizer and other input prices were much lower than today.

“So we need to need to start thinking about ways that the reference price for rice could be ratcheted up to take some of the pressure off producers,” said Outlaw, whose organization works with more than 600 producers in the U.S. to provide analysis for farm policy decisions.

Outlaw was asked if indexing the reference price for rice would help PLC provide a stronger safety net.

“We’ve actually looked at indexing many times for different members of this committee,” he said, “And there are approaches that will work. You have to be careful which indices you tie these movements to, but it certainly would work and offset some of the cost. To be realistic, the indices are delayed, but it would still be better than nothing.”

“I understand that you can’t index something based on a future projection” said Crawford. “It would have to be based on a three-year history or something like that. But the fact that we can have a conversation about the potential for indexing to address this shortfall I think is worth mentioning.”

To view all of the hearing, visit https://www.youtube.com/watch?v=2_GQI6b6CCs.

About the Author(s)

Forrest Laws

Forrest Laws, senior director of content for Farm Press, spent 10 years with The Memphis Press-Scimitar before joining Delta Farm Press in 1980. He has written extensively on farm production practices, crop marketing, farm legislation, environmental regulations and alternative energy. He now oversees the content creation for Delta, Southeast, Southwest and Western Farm Press. He resides in Memphis, Tenn. He served as a missile launch officer in the U.S. Air Force before resuming his career in journalism with The Press-Scimitar.

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